COMMISSIONER OF INCOME TAX Vs. KANAKARATHINAM K R

JUDGEMENT

(1.) ALL these references deal with the asst. yrs. 1960 -61 to 1969 -70. In these cases the common questions of law referred to this Court are :

(2.) UNDER two sale deeds dated November 15, 1959, Kanakarathinam and his wife, Yeshodammal, separately purchased 5/8 and 3/8th share respectively in a building known as "Opera House" at Bangalore. "Opera House" was a cinema theatre. It was leased out on a monthly rent of Rs. 950 for the building and Rs. 550 for the machinery and furniture, etc., totally in all Rs. 1,500 per month. The ITO took the view that since the letting of the building is inseparable from the letting of the machinery and furniture the income from the letting of the building "Opera House" was chargeable as income from other sources under S. 56(iii) of IT Act, 1961. He took the assessable entity as an AOP consisting of Kanakarathinam and his wife Yeshodammal.

(3.) IT is indeed unfortunate that the Tribunal has not annexed to the statement of the case either of the sale deeds, in the respective names of Kanakarathinam and Yeshodammal, or the lease deed. Even as regards the lease, there was a statement before us on behalf of the assessee's counsel that at the time of purchase by the respective individuals there was a subsisting lease deed and that the lessee was asked to attorn to the respective co -owners. It was also stated that the lease executed subsequent to the two co - owners coming on the scene was only in favour of the same lessee. The submission, therefore, was that there was merely an exercise of a right of ownership in the respective individuals granting a lease of the property. The learned counsel for the CIT contended that this being a commercial asset the parties could only have come together for exploiting the said asset and that, in such a case, it should be held that they had joined together for earning profits and should be considered as an AOP. The matter, as to when an association can be said to have come into existence, came up for decision by the Supreme Court on several occasions.